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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Tuesday, September 18, 2018, Vol. 19, No. 185


                            Headlines


G R E E C E

INTRALOT SA: S&P Cuts Issuer Credit Rating to B-, Outlook Neg.


I T A L Y

BANCA IFIS: Fitch Affirms BB+ Long-Term IDR, Outlook Stable


M A C E D O N I A

MACEDONIA: S&P Affirms 'BB-/B' Currency SCRs, Outlook Stable


M O N T E N E G R O

MONTENEGRO: S&P Affirms 'B+/B' Currency SCRs, Outlook Stable


N E T H E R L A N D S

ALPHA AB: Moody's Assigns First-Time B3 CFR, Outlook Stable
ALPHA AB: Fitch Assigns 'B(EXP)' Long-Term IDR, Outlook Stable
BARINGS EURO 2018-2: Fitch Assigns B- Rating to Class F Debt
GBT III BV: S&P Assigns 'BB' Issuer Credit Rating, Outlook Stable


P O L A N D

GETBACK SA: KNF Regulator to Meet with Creditors


R U S S I A

GLOBEXBANK: Fitch Affirms BB- LT IDR, Outlook Stable
KOMI REPUBLIC: Fitch Affirms Then Withdraws 'BB-' LT IDR
MTS BANK: Fitch Hikes Long-Term IDR to BB-, Outlook Negative
YAROSLAVL REGION: Fitch Affirms BB- LT IDRs, Outlook Stable


T U R K E Y

TURKEY: Central Bank Raises Interest Rates Amid Economic Woes
TURKEY: Issues Decree on Capital Loss for Indebted Companies
VB DPR: S&P Lowers 2011-A Floating-Rate Notes Rating to 'B+'


U N I T E D   K I N G D O M

DEBENHAMS PLC: Future Hinges on Success of Rescue Fundraising
GEORGE BIRCHALL: Poor Trading Conditions Prompt Administration
HOMEBASE: Two Top Execs Get Huge Payoffs Despite Failed Overhaul
MANSARD MORTGAGES 2006-1: Fitch Hikes Cl. B2a Debt Rating to B+
TOGETHER FINANCIAL: S&P Affirms BB- Long-Term ICR, Outlook Stable

VTB CAPITAL: S&P Lowers Ratings to 'BB+/B', Outlook Stable


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G R E E C E
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INTRALOT SA: S&P Cuts Issuer Credit Rating to B-, Outlook Neg.
--------------------------------------------------------------
S&P Global Rating said that it lowered to 'B-' from 'B' its long-
term issuer credit rating on Greece-based gaming company Intralot
S.A. (Intralot). The outlook is negative.

At the same time, S&P lowered to 'B-' its issue ratings on
Intralot's senior unsecured notes, issued by subsidiary Intralot
Capital Luxembourg S.A. The recovery rating on these notes is
unchanged, reflecting our expectation of average recovery (30%-
50%; rounded estimate: 45%).

S&P said, "The downgrade follows Intralot's weaker-than-
anticipated operating results in the first half of 2018 and our
expectation for a further and more meaningful weakening in the
second half of 2018, which could continue into 2019.
Specifically, we expect a further increase in proportionate
adjusted debt to EBITDA to 8.5x-9.0x by year-end 2018, and we
expect Intralot would only start reducing leverage in 2020. We
expect discretionary cash flows (DCF; free operating cash flows
after minority dividend payments) on a fully consolidated basis
will be negative in the next couple of years, due to high capital
expenditure (capex) requirements. This puts further pressure on
the rating.

"Under our revised forecasts, we expect lower revenues for 2018
on a consolidated basis compared to our previous forecast (about
EUR1,050 million versus EUR1,104 million), mainly due to adverse
foreign exchange (FX) changes in Turkey and Argentina in the
third quarter of 2018. On a proportionate basis, we expect S&P
Global Ratings adjusted EBITDA in 2018 will be about EUR90
million, below our previously forecasted EUR110 million. Our
forecast for gross debt in 2018 is broadly unchanged at about
EUR750 million-EUR755 million, while in 2019, we expect Intralot
will draw on its revolving credit facility (RCF) in order to fund
capex needs. We therefore estimate that debt should reach about
EUR785 million, further increasing leverage."

In S&P's view, the weaker performance that S&P expects for the
next couple of years is a result of:

-- The ongoing turmoil in the Turkish market, where the company
     generates about 20% of its fully consolidated EBITDA and
     about 15% on a proportionally consolidated basis. The Turkish
     lira has exhibited extreme volatility, followed by Turkey's
    prolonged economic overheating, external leveraging, and
    policy changes. Since the beginning of the year, the lira has
    dropped 38% against the euro. S&P said, "Our downgrade of
    Intralot incorporates our view of less favorable market
    conditions in 2018-2019, and our forecast of an economic
    recession in Turkey in 2019 with GDP growth of negative 0.5%
    due to exchange rate depreciation and volatility. It also
    takes into consideration a likely reduction in foreign
    financing inflows. We believe this will continue to increase
     volatility and put pressure on the performance of Inteltek
     and Bilyoner, the two subsidiaries in Turkey."

-- The high volatility in the Argentine peso and the risk for
    further volatility in Argentina, where the company generates
    close to 10% of its fully consolidated EBITDA and about 8% on
    a proportionally consolidated basis. Since the beginning of
     the year, the Argentine peso has dropped 50% against the
     euro.

-- S&P said, "Our previous expectation for EBITDA growth in
     several other countries is now less feasible due to
     increasing competition and lower-than-expected topline growth
     since the beginning of the year. For example, in Morocco, we
     expect an EBITDA gap of about EUR5 million-EUR10 million
     versus our previous forecast, as a result of weaker-than-
     expected performance."

In S&P's view, Intralot's business remains constrained by its
significant exposure to emerging markets (such as Turkey,
Morocco, Argentina and Azerbaijan), potential significant FX
fluctuations, the high regulatory and taxation risk in the global
gaming industry, and the uncertainty regarding future license
renewals (for example, the Turkish license -- Inteltek -- which
represents about 10% of the total EBITDA and was recently
prolonged for an additional year until 2019). These business
constraints are somewhat offset by Intralot's strong position
among gaming technology leaders and largest sports betting
companies and by its role as a vertically integrated company,
providing technology as well as operating machines. Intralot is
also well positioned in the U.S., which could benefit the company
in the future in light of the recent changes in U.S. sport
betting regulations.

The earnings from Intralot's partly owned subsidiaries (such as
those in Turkey, Bulgaria, and Argentina) are fully consolidated,
while debt is largely situated at the holdco. This distorts the
company's credit metrics. S&P therefore assesses Intralot's
financial risk profile on a proportionate basis because not all
of the group's cash flows are available to service debt, since
they belong to partnerships and ultimately to minorities
according to their relevant stakes.

On a fully consolidated basis, Intralot has weak DCF generation
with a highly leveraged DCF-to-debt ratio. S&P considers this to
be a true measure of free cash flow for Intralot, since it
measures DCF after deducting significant nondiscretionary
dividends paid to minority interests at the subsidiary level.

S&P's base case assumes:

-- S&P said, "Macroeconomic prospects vary in Intralot's
    operating countries; we expect real GDP growth over 2018-2020
     will be about 2%-3% in the U.S. and Turkey, 3%-4% in
     Bulgaria, and 1%-2% in Argentina. We believe this could have
     a positive impact on Intralot's revenue growth over the same
     period, but we maintain a restrained view due to uncertainty
     in some key markets."

-- Revenue to decrease by about 4%-5% in 2018, mainly driven by
    the recent adverse FX fluctuations in Turkey and Argentina,
    underperformance in other markets such as Bulgaria and the
    Netherlands, and the amendment of the Greek Organisation of
    Football Prognostics (OPAP) contract in Greece. S&P expects
    Intralot will grow at about 1%-3% annually in 2019 and 2020.

-- Intralot's adjusted EBITDA margin to decrease to about 13% in
    2018, driven by the Illinois project implementation costs as
    well as lower margins in Greece (under the new OPAP contract)
    and in Turkey. In 2019, S&P expects the EBITDA margin will
    remain broadly stable, and it expects an increase in 2020
    thanks to margin improvement, mainly in the U.S.

-- Dividends to minority interest of EUR37 million-EUR38 million
    annually during 2018-2020. S&P views Intralot's dividends to
    minority interest as nondiscretionary in nature because
    noncontrolling partners of Intralot are entitled to their
    share of profits at the operating subsidiary level.

-- Capex of about EUR120 million-EUR125 million in 2018,
    primarily related to the Illinois project implementation. S&P
    said, "We assume that Intralot will finance the capex needed
    to roll out the Illinois project with cash on the balance
    sheet. In 2019, we expect capex of EUR80 million-EUR85
    million, assuming the renewal of the contracts in Turkey,
    Morocco, and the U.S., and investments in the Greek gambling
    market and U.S. sports betting market, among others. In 2020,
    we expect capex will normalize to about EUR50 million."

-- Gross debt of about EUR750 million-EUR755 million at the end
    of 2018, followed by an increase of about EUR30 million in
    2019 related to a planned drawing of an RCF to finance capex.
    S&P expects Intralot will fully repay this EUR30 million in
    2020.

Based on these assumptions, S&P arrives at the following credit
measures:

-- On a proportionally consolidated basis, S&P expects an
    adjusted debt-to-EBITDA increase to about 8.5x-9.0x in 2018
    and 2019. On a fully consolidated basis, S&P forecasts
    adjusted leverage of 5.5x-6.0x in 2018 and 2019.

-- On a proportionally consolidated basis, S&P expects EBITDA
    interest coverage of 1.5x in 2018 and 2019, climbing slightly
    to 1.7x by 2020. On a fully consolidated basis, S&P forecasts
    2x-2.5x EBITDA interest coverage for 2018 and 2019.

-- S&P expects negative DCF in 2018 and 2019 due to weaker cash
    flow generation and high capex needs.

COVENANT ANALYSIS

Documentation governing Intralot's EUR500 million and EUR250
million senior unsecured notes do not include any maintenance
financial covenants.

However, Intralot has a springing maintenance covenant on two
bilateral credit facilities amounting to a total of EUR70
million. The EUR30 million bilateral facility has a covenant of
4.75x maximum net leverage, and the EUR40 million facility is
currently under negotiations to increase the net leverage
covenant to 4.75x from 3.75x. S&P assumes the successful
amendment of the second bilateral facility, and therefore a
leverage covenant of 4.75x, which will be tested if the RCF is
drawn. Under our base case, S&P expects covenant leverage of
about 4.4x as of Dec. 31, 2018, remaining at this level in 2019.
This is lower then 10% headroom, which could pressure the
company's ability to draw high amounts on the RCF if needed.

S&P said, "The negative outlook reflects our view that the
volatile environment in some of Intralot's operating markets
(mainly Turkey and Argentina) could put pressure on the company's
operating performance in the next 12 months and consequently
prevent any potential deleveraging. If Intralot maintained
leverage at its current level for a prolonged period and DCF
remained negative, we might reconsider our view of the capital
structure's sustainability.

"In addition, the tight covenant headroom of less than 10% in our
2018 and 2019 forecasts reduces the company's ability to absorb
further unexpected operating setbacks, and could put pressure on
the rating if the company needed to draw on the RCF but had
limited ability to do so.

"We could lower the ratings if Intralot's DCF remained negative
for a prolonged period and the company maintained leverage above
8.5x with no clear deleveraging trend. This could happen if
Intralot raised further debt to finance capex needs or if EBITDA
dropped lower than our base case." The latter could occur if the
company's operating performance were weaker than expected, for
example if Intralot disposed profitable operations or lost key
licenses without replacing them with new profitable acquisitions,
or if the market conditions further deteriorated.

Rating pressure could also arise if the headroom under Intralot's
financial covenants further tightened, such that it posed a
liquidity stress and rendered the company unable to fund capex
needs and other expenses from the existing facilities.

S&P said, "We could revise the outlook back to stable if
operating performance stabilized such that we started seeing a
gradual increase in EBITDA and decrease in leverage. We could
also consider revising the outlook back to stable if the company
substantially decreased debt by using proceeds from asset sales
(such as Gamenet shares, for example) so that we no longer
considered the capital structure at risk of becoming
unsustainable.

"We are unlikely to raise the rating over the next 12 months,
given our expectations of sustained high leverage and no return
to material positive DCF before 2020. However, we could foresee
such a scenario if Intralot made a very swift recovery by posting
4%-6% revenue growth in 2019 as a result of securing new licenses
or improving the performance of the existing ones. This could
support the reduction in adjusted leverage to below 7x, as well
as the generation of sustainably positive DCF. This would have to
be combined with sufficient liquidity sources to cover capex and
other expenses."


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I T A L Y
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BANCA IFIS: Fitch Affirms BB+ Long-Term IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Banca IFIS S.p.A.'s (IFIS) Long-Term
Issuer Default Rating (IDR) at 'BB+' and Viability Rating (VR) at
'bb+'. The Outlook on the Long-Term IDR is Stable.

KEY RATING DRIVERS

IDRS, VR AND SENIOR DEBT

The ratings of IFIS reflect its adequate specialist franchise in
niche businesses in Italy, which has to date resulted in a more
resilient profitability than other second tier domestic banks.
The ratings also reflect IFIS's rapid expansion into new
businesses over the past five years, as well as capitalisation
and leverage that are maintained with adequate buffers over
regulatory minimum requirements. The ratings further factor into
the weak asset quality indicators of IFIS by international
standards and its limited, albeit improving, funding
diversification towards wholesale sources.

IFIS is a small Italian bank, which provides factoring, where it
has a long track record, and other financial services to SMEs;
since 2012 it has been expanding in the domestic non-performing
loan (NPL) market by becoming a leading buyer in the consumer
segment. Its company profile is specialised but diversified into
various business segments, while the business model has been less
stable in recent years as IFIS expanded rapidly into new
activities.

IFIS's growth strategy aims to widen the range of products
offered to the bank's SME client base and, as such, strategic
objectives can shift based on market opportunities. Over the past
12 months, the bank made three small acquisitions to strengthen
and diversify its activities in the NPL and drugstore financing
sectors. Fitch expects that the bank will continue to consider
opportunities for external growth but this strategy might become
more challenging to execute given worsened market and financing
conditions for Italian banks.

IFIS's asset quality metrics (adjusted for the NPL purchase
business) improved in 1H18, due to the adoption of tighter write-
off rules as required by the domestic regulator, but remain weak
by domestic and international standards. Reported stage 3 loans
at end-1H18 were equal to 10% of gross loans, since IFRS9
requires NPLs purchased through the Interbanca acquisition to be
accounted for at purchase price rather than at their gross value.
This equals to a still high impaired loan ratio of 16.4% as
calculated under the previous standard.

Coverage of impaired loans is adequate and broadly in line with
other medium sized domestic banks'. While Fitch does not expect
deterioration in asset quality metrics stemming from the leasing
and corporate banking businesses acquired through Interbanca,
future growth in these segments could expose the group to
increased credit risk.

IFIS's profitability, which has proven sound and consistently
above the domestic industry average in recent years, decreased in
1H18 mainly due to lower revenue in the NPL segment and rising
operating costs following the consolidation of new entities.
Fitch expects that group's revenue will remain sound but that
operating margin may shrink as a result of competition and the
integration of new business lines.

Fitch views IFIS's capitalisation and leverage as sound with
adequate buffers being maintained over regulatory minimum
requirements. In 1H18, the bank's CET1 and total capital ratios
slightly decreased to 11.1% and 15.4% respectively, due to risk-
weighted assets (RWAs) increasing more than common equity. The
group's capitalisation is underpinned by healthy internal capital
generation, moderate dividend pay-out and moderate capital
encumbrance by impaired loans.

Holding La Scogliera is considering merging into Banca IFIS,
potentially as early as before year-end, to strengthen the
latter's regulatory capital ratios. This transaction, which
should allow the bank to fully compute its minorities into its
regulatory capital, would result in a nearly 400bp increase in
its CET1 ratio, thus creating larger buffers to support future
business expansion.

IFIS funds its activities mainly through customer deposits with
limited, albeit growing, diversification towards wholesale
channels. Over the past 18 months, the bank announced its first
EMTN programme and entered the institutional market through a
number of senior and subordinated issuances with the aim of
diversifying its funding sources. ECB funding utilisation is
contained. The rise of IFIS's loan-to-deposit ratio to 144% at
end-1H18 from 140% at end-2017 signals the increasing utilisation
of wholesale funding. Fitch views IFIS's liquidity as being in
line with the bank's rating. Its liquidity coverage ratio is
maintained with ample buffers over regulatory minimum
requirements.

SUPPORT RATING AND SUPPORT RATING FLOOR

The bank's Support Rating and Support Rating Floor reflect
Fitch's view that senior creditors cannot rely on receiving full
extraordinary support from the sovereign if a bank becomes non-
viable. The EU's Bank Recovery and Resolution Directive and the
Single Resolution Mechanism for eurozone banks provide a
framework for resolving banks that require senior creditors to
participate in losses, if necessary, instead of a bank receiving
sovereign support.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

IFIS's subordinated Tier 2 debt is rated one notch below the VR
for loss severity to reflect below-average recovery prospects. No
notching is applied for incremental non-performance risk because
write-down of the notes will only occur once the point of non-
viability is reached and there is no coupon flexibility before
non-viability.

RATING SENSITIVITIES

IDRS, VR AND SENIOR DEBT

IFIS's ratings may come under pressure if profitability
deteriorates significantly as a result of increased funding costs
and/or margin erosion or much reduced business volumes. Rapid
business expansion without an equivalent evolution of the risk
controls framework, especially if it results in material capital
deterioration and profit volatility, or a significant change in
the bank's risk appetite could also be rating-negative. The
ratings are also sensitive to deterioration in the operating
environment in Italy as this could affect asset quality. Ratings
would also come under pressure if the bank excessively increases
reliance on wholesale funding.

Rating upside is, in Fitch's view, limited but the bank's ratings
could, over time, benefit from a stabilisation of the bank's
business model and evidence of the bank continuing to generate
sustainable profits while maintaining adequate capitalisation and
good control over its non-performing loan portfolio.

SUPPORT RATING AND SUPPORT RATING FLOOR

An upgrade of the Support Rating and upward revision of the
Support Rating Floor would be contingent on a positive change in
the sovereign's propensity to support the banks. In Fitch's view,
this is highly unlikely, although not impossible.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The subordinated debt rating is primarily sensitive to the same
factors that would affect the bank's VR, from which it is
notched. The rating is also sensitive to a change in notching if
Fitch changes its assessment of loss severity or non-performance
risk.

The rating actions are as follows:

Long-Term IDR: affirmed at 'BB+'; Outlook Stable

Short-Term IDR: affirmed at 'B'

Viability Rating: affirmed at 'bb+'

Support Rating: affirmed at '5'

Support Rating Floor: affirmed at 'No Floor'

Senior unsecured debt: affirmed at 'BB+'

Subordinated Tier 2 notes: affirmed at 'BB'


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M A C E D O N I A
=================


MACEDONIA: S&P Affirms 'BB-/B' Currency SCRs, Outlook Stable
------------------------------------------------------------
On Sept. 14, 2018, S&P Global Ratings affirmed its 'BB-/B'
long- and short-term foreign and local currency sovereign credit
ratings on Macedonia. The outlook on the long-term ratings is
stable.

OUTLOOK

The stable outlook reflects the balance between the risks from
Macedonia's rising public debt and remaining political
uncertainty, and the country's favorable economic prospects.

S&P said, "We could raise our ratings on Macedonia if timely
reforms are implemented and further progress is made in resolving
the longstanding name dispute with Greece, and these lead to the
country's economic prospects improving and strengthen Macedonia's
likelihood of EU accession.

"We could lower the ratings if major political tensions returned
or reform momentum waned, impairing growth and foreign direct
investment (FDI) inflows and undermining the country's longer-
term growth potential. We could also lower the ratings if large
fiscal slippages or off-budget activities were to call into
question the sustainability of Macedonia's public debt, raise the
sovereign's borrowing costs, and substantially increase its
external obligations, given the constraints of the exchange-rate
regime."

RATIONALE

The ratings on Macedonia reflect S&P's view of the country's
relatively low income levels, still comparatively weak checks and
balances between state institutions, and limited monetary policy
flexibility arising from the country's fixed-exchange-rate
regime. The ratings are primarily supported by moderate -- albeit
rising -- external and public debt levels and favorable growth
potential.

Institutional and Economic Profile: Growth has strengthened but
political risks remain

-- The coalition centered around the Social Democratic Union of
    Macedonia (SDSM) has recently bolstered its parliamentary
    standing and now commands a stronger majority in the
    legislature, reducing political uncertainty.

-- Uncertainties remain around the upcoming referendum on the
    country's name at the end of September.

Despite lagging public investment, growth has strengthened with
output expanding by 3.1% in the second quarter of 2018 compared
with stagnation last year.  In S&P's view, domestic political
stability in Macedonia has improved over the last year.
Previously, Macedonia endured a long period of political
volatility, culminating in early elections at the end of 2016,
and a subsequent parliamentary gridlock. The new administration
led by the SDSM was formed in May 2017 and announced as its main
priorities EU and NATO accession, alongside improved transparency
and reform implementation.

The government initially relied on support from the Democratic
Union for Integration, an Albanian minority party, and controlled
only a slim majority in the parliament. More recently, other
Albanian parties, The Democratic Party of Albanians and BESA,
expressed support and bolstered the coalition's parliamentary
standing. In S&P's view, this reduces political uncertainty and
should make it easier to implement some of the initiatives SDSM
has put forward.

S&P notes that progress on some of the announced priorities has
already been achieved. For instance, the government took steps to
improve the transparency of its fiscal accounts. The new
administration has also made notable progress toward resolving
the decades-long name dispute with Greece, which is central for
Macedonia's NATO and EU accession. In June 2018, the governments
of the two countries reached a preliminary deal, whereby
Macedonia would change its name to Republic of North Macedonia.

At the same time, it remains uncertain if Macedonia will fully
implement the proposed solution. Various steps still need to be
completed, including the Sept. 30 referendum in Macedonia and the
amendment of the country's constitution, as well as the
parliamentary ratification of the agreement in Greece. The
outcome of the referendum is currently difficult to predict, and
the proposal is facing potential opposition in both countries'
parliaments. Failure to pass any of these stages may derail the
deal. In addition, this could trigger a new political crisis in
Macedonia, given the prime minister's pledge to resign if the
referendum does not pass.

A successful resolution of the name dispute, on the other hand,
would pave the way for negotiations on Macedonia's accession to
the EU and NATO. In S&P's view, the opening of negotiations could
bring long-term economic benefits as Macedonia implements reforms
required as part of the accession negotiations. Moreover, it
could have some short-term economic effects through improved
investor confidence and FDI inflows.

Following economic stagnation in 2017, economic growth has
recently strengthened to 3.1% in the second quarter of 2018 in
year-on-year terms. Importantly, this has happened despite a
number of delays on a public highway construction project and
declining investments, implying a stronger performance in the
rest of the economy. S&P said, "We expect growth will average
close to 3% over the next three years, driven by investments in
both the private and public sectors, following improved political
stability. In addition, we expect a more upbeat dynamic of net
exports, thanks to favorable foreign trade conditions and the
gradual diversification of Macedonia's export basket."

S&P said, "Downside risks to our forecasts remain, not least if
the political instability intensifies again. Macedonia's GDP per
capita, estimated at $6,100 in 2018, is well below that of EU
peers. In recent years, the government has attempted to attract
FDI to special free economic zones, capitalizing on the country's
comparatively favorable tax regime, low labor costs, and
proximity to European markets. In our view, were major political
tensions to return, this could weigh on growth if a substantial
portion of FDIs are cancelled or postponed."

Flexibility and Performance Profile: After a period of growth, we
expect public debt to GDP to gradually stabilize from 2020

-- Macedonia's public debt burden remains moderate in a global
    context.

-- Although downside risks remain, S&P expects net general
    government debt to gradually stabilize at about 45% of GDP in
    2020-2021 after a prolonged period of growth.

Macedonia's monetary flexibility is higher than that of other
Balkan states, but the denar's peg to the euro still constrains
the central bank's policies.  Macedonia has been running
recurrent fiscal deficits. These have averaged 3.5% of GDP over
the past five years. Even though the shortfalls have reduced to
under 3% of GDP in 2016-2017, this primarily reflects
underexecution of expenditures as a result of prevailing
political uncertainty, rather than pro-active fiscal
consolidation.

In May 2018, the SDSM-led government adopted a new fiscal
strategy for 2019-2021. The document underscores the focus on
budgetary consolidation, improvement of the public finance
management framework, and implementation of priority investment
projects. According to government projections, the deficit for
the general government sector should reduce to 2.0% of GDP in
2021 from the planned 2.7% of GDP in 2018.

S&P said, "In our view, the 2018 target appears achievable. Over
the first six months, the deficit amounted to only 0.4% of GDP,
although this is once again due to the underexecution of the
capital budget. We anticipate that as the spending accelerates
through the remainder of the year, the final outcome will be in
line with the government's target. We expect slightly wider
deficits further on in the forecast horizon, however, averaging
2.7% of GDP as compared against projections in the government's
2019-2021 fiscal strategy."

S&P believes that some downside risks to fiscal consolidation
remain. As was the case in the government's previous fiscal plan
announced in December 2017, the new strategy remains
significantly dependent on the pace of economic growth. That
said, S&P positively views additional measures the government has
proposed:

-- The application of higher personal income tax rates for
    higher income earners, although this could be difficult to
    implement for political reasons.

-- The introduction of annual budget expenditure ceilings, which
    should restrain expenditure growth.

The authorities also aim to continue public financial management
reform with a focus on improved transparency, budgeting
processes, and oversight. S&P understands that work is ongoing to
collect information on arrears outstanding at various levels of
government.

S&P said, "Reflecting our budgetary forecasts, Macedonia's net
general government debt will still continue to rise until 2020,
although it should stabilize at close to 45% of GDP thereafter.
This compares to net general government debt of just 27% of GDP
in 2012. Our calculation includes the increasing debt of the
Public Enterprise for State Roads (PESR), because we believe PESR
may need to rely on government transfers to service its debt in
the future. In particular, a government-guaranteed EUR580 million
loan from the Export-Import Bank of China, contracted in 2013 for
the construction of two highway sections, will continue to
contribute to the increasing debt burden. We also factor in a
moderate amount of arrears clearance, assumed at around 1% of
GDP."

In the past, Macedonia has repeatedly been able to tap the
Eurobond market. This has made the government's balance sheet
more vulnerable to potential foreign-exchange movements, because
close to 80% of government debt is denominated in foreign
currency (including part of domestic debt). Last year, the
authorities increased their borrowing in the domestic market, but
they have also recently issued a EUR500 million Eurobond at a
historically low interest rate, benefiting from the European
Central Bank's loose monetary policy. We believe the favorable
terms have also been aided by the improved domestic political
stability. In the future, the government plans to maintain a
regular presence on international financial markets.

With the public sector increasingly borrowing abroad, the
Macedonian economy's external debt has been rising, despite some
deleveraging in the banking sector. In 2017, S&P estimates that
gross external debt, net of liquid financial and public-sector
assets, increased to about 33% of current account receipts.

S&P said, "We forecast that Macedonia's external indebtedness
will slightly decline over the next four years. The current
account deficit will gradually tighten and reach 1.6% of GDP in
2021, partly thanks to the positive impact of foreign companies
expansion' in the free economic zones. We project these deficits
will be financed by a combination of borrowing and net FDI
inflows.

"The Macedonian denar is pegged to the euro, and we believe the
existing foreign-exchange regime restricts monetary policy
flexibility. However, measures undertaken by the National Bank of
the Republic of Macedonia (NBRM), such as lower reserve
requirements for denar-denominated liabilities, have lowered
overall euroization in Macedonia, with foreign currency-
denominated deposits and loans remaining at around 40% of total
deposits and loans in recent years. We note that this is a lower
proportion than in other Balkan economies and affords the NBRM
additional room for policy response."

The NBRM's gross foreign exchange reserves have been on an upward
trajectory in recent months, following the Eurobond issue and the
purchase of foreign currency. Nevertheless, S&P believes there
are vulnerabilities that could put some pressure on the existing
peg in the unlikely event of confidence in the banking system
taking a turn for the worse and prompting conversion of local
currency deposits into euro. This is particularly so as Macedonia
runs a pegged exchange rate arrangement while being in a net
external debtor position vis-Ö-vis the rest of the world, at 60%
of GDP.

Macedonia's banking system, which is predominantly foreign owned,
has seen several bouts of volatility in recent years. For
example, political developments caused deposit outflows from
Macedonia's banking sector in April 2016, although the majority
of funds have since returned to the system. In general, the
banking system appears well capitalized and profitable, and it is
largely funded by domestic deposits. Macedonia's regulatory and
supervisory framework under the NBRM has proven resilient to past
episodes of volatility; the NBRM reacted swiftly to the
volatility in April 2016 by raising interest rates and
intervening in the foreign exchange market to support the
currency peg, as well as deploying several other measures. In
addition, the NBRM has moved ahead with the implementation of
Basel III principles, while the application of new regulation on
credit risk management in line with International Financial
Reporting Standard 9 will be rolled out in July 2019. At present,
S&P estimates that nonperforming loans in the system amount to
about 5.2% of the total, which compares favorably with other
countries in the region.

Rather exceptionally for the region, bank lending in Macedonia
has continued to increase in recent years. That said, the trends
are uneven; while lending to households has been robust, the
stock of credit to corporates has remained flat. S&P expect the
stock of domestic credit to grow by an annual average of 6% over
the next four years.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision. After the primary analyst gave opening remarks and
explained the recommendation, the Committee discussed key rating
factors and critical issues in accordance with the relevant
criteria. Qualitative and quantitative risk factors were
considered and discussed, looking at track-record and forecasts.

The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.

  RATINGS LIST
  Ratings Affirmed

  Macedonia
   Sovereign Credit Rating                     BB-/Stable/B
   Transfer & Convertibility Assessment        BB
   Senior Unsecured                            BB-


===================
M O N T E N E G R O
===================


MONTENEGRO: S&P Affirms 'B+/B' Currency SCRs, Outlook Stable
------------------------------------------------------------
On Sept. 14, 2018, S&P Global Ratings affirmed its 'B+/B'
long- and short-term foreign and local currency sovereign credit
ratings on Montenegro. The outlook on the long-term ratings
remains stable.

OUTLOOK

S&P said, "The stable outlook balances the implementation risks
of Montenegro's fiscal adjustment program over the next 12 months
and the potential for a positive rating action if economic growth
is stronger than our base case.

"We could lower the ratings if Montenegro's fiscal performance
were materially weaker than we currently forecast. This could be
the case, for example, if new revenue measures adopted under the
2017-2020 fiscal strategy fell short of target. It could also be
the case if the government found it difficult to control spending
pressures, particularly given the general election in 2020.
Additionally, ratings pressure could emerge if the flow of
inbound foreign direct investment dried up or Montenegro faced
unforeseen pressure from the gradual tightening of global
monetary policy.

"We could raise the ratings on Montenegro if multiple ongoing
projects in infrastructure, energy, and tourism yielded better-
than-expected results, improving the country's growth outlook and
reducing balance-of-payments risks."

RATIONALE

The ratings on Montenegro remain constrained by its high net
general government debt burden, which we expect will peak at 65%
of GDP in 2019. This is exacerbated by Montenegro's unilateral
adoption of the euro, which leaves almost no room for monetary
policy flexibility. The country also remains vulnerable to
balance-of-payments risks, given the large net external liability
position and persistent historical current account deficits.

The ratings remain supported by the country's favorable growth
potential, given the possibilities for further development of
tourism and the energy sector. The ratings are also supported by
the country's comparatively strong institutional settings in a
regional context and upside potential from structural reforms
that will have to be implemented for Montenegro to become an EU
member.

Institutional and Economic Profile: Currently strong growth set
to moderately weaken as fiscal adjustment advances

-- Long-time political strongman Milo Djukanovic won the April
     2018 presidential elections. Montenegro continues EU
     accession negotiations but S&P expects only gradual progress.

-- Growth rates will moderately weaken from 4.3% in 2017 as
     large infrastructure projects are finalized and fiscal
     adjustment takes hold.

-- Nevertheless, S&P believes the country's long-term growth
    potential remains favorable, stemming from unexplored
    opportunities in the tourism and energy sectors.

Montenegro held presidential elections in April 2018. Despite
announcing his candidacy less than a month before the ballot, the
long-time political strongman Milo Djukanovic, of the Democratic
Party of Socialists (DPS), won in the first round, securing over
50% of the votes. Djukanovic has been at the centre of
Montenegrin politics for over two decades, having previously
served as president and prime minister on multiple occasions. The
May 2018 local elections also saw DPS secure the most votes in 10
out of 12 constituencies, further bolstering its position. S&P
does not expect radical changes as a result of the recent
elections and anticipate that Montenegro will continue on its EU
accession path, having previously been admitted to NATO in 2017.

S&P said, "Early implementation of reforms that will bring
Montenegro in line with the EU acquis represents upside, but we
believe this process will be only gradual. Despite renewed
momentum relating to the integration of the Balkans, in our view
the 2025 EU accession date could be optimistic. We note that
further progress by Montenegro could be hampered both by domestic
developments and rising euroscepticism among the existing member
states, which -- under EU rules -- will ultimately have to
unanimously approve Montenegro's membership bid. Still, we
believe the ongoing EU accession negotiations strengthen
Montenegro's policy frameworks and we view the country's
institutional settings favorably in a regional context.

"Several domestic political and policy risks remain. We note the
potential for instability, as highlighted by the events
surrounding the 2016 general election, when an alleged coup took
place. Subsequently, multiple opposition members faced
allegations, with several parties boycotting parliament in the
election aftermath. More recently, in April and May 2018, several
journalists were attacked. On the policy front, we see risks
regarding the government's adopted 2017-2020 fiscal strategy.
Although our base-case forecast assumes a broad commitment to
budgetary tightening, this could be difficult to achieve in the
context of the upcoming 2020 general election. This is
particularly the case given the coalition's current narrow
majority in parliament."

Positively, despite some political noise, Montenegro's economy
continues to develop. Output expanded by an annual average of
3.5% over 2015-2017 and by 4.5% in the first quarter of 2018,
year-on-year. Montenegro's economy is primarily driven by tourism
and related activities and strong visitor growth has contributed
to broader economic dynamics. S&P notes that the number of
visitors rose by 16% over the first half of 2018 while overnight
stays increased by close to 12%, partly helped by a cyclical
upturn in Europe and ongoing recovery in Russia and the
Commonwealth of Independent States.

S&P notes that Montenegro's strong growth was also underpinned by
the public-financed ongoing construction of a new highway. The
government plans that, upon completion, the highway will link the
coastal port of Bar with the Serbian border, connecting remote
regions and improving road safety. Only the first section, a 41km
segment north of the capital Podgorica, is so far under
construction. Because of difficult terrain, the cost of the first
section is high, estimated at close to 20% of 2018 GDP and
largely financed by a U.S. dollar-denominated loan from China.

Aside from political considerations, the direct net economic
benefits from the highway are uncertain. S&P believes that its
construction has led to a notable accumulation of debt and
erosion of fiscal headroom. This is particularly pertinent given
that budgetary policy is the government's main lever to influence
domestic economic conditions since Montenegro has no independent
monetary policy, given the unilateral euro adoption.

To curb the increase in debt from the highway construction, in
mid-2017 the government announced a fiscal consolidation strategy
aimed at reducing the non-highway deficit. Consequently, S&P
expects some moderation of growth rates to below 3%, as fiscal
consolidation advances and the first highway section is complete
in 2019.

S&P continues to view Montenegro's long-term economic prospects
as favorable. This primarily stems from the multiple
opportunities that exist in the tourism sector. A number of
hospitality projects are currently being implemented, including
several high-end coastal resorts. S&P also understands that there
is untapped potential in winter ski tourism and energy
generation.

Flexibility and Performance Profile: Public sector leverage
should decline from 2019 but downside risks remain

-- S&P expects net general government debt to start declining
    from a peak of 65% of GDP in 2019 when the highway
    construction project is complete.

-- Balance-of-payments vulnerabilities remain elevated, given
    the recurrent historical current account deficits and the
    resulting large net external liability position, which S&P
    estimates at 250% of GDP.

-- Montenegro has no monetary policy flexibility because it has
    unilaterally adopted the euro while not being part of the
    eurozone.

Montenegro has historically posted recurring fiscal deficits.
These have been a result of high social spending and transfers,
as well as the substantial shadow economy, which eludes taxation.
More recently, the deficits have widened as a result of the
implementation of the highway project.

To control the upward public debt trajectory, the government has
embarked on a fiscal consolidation strategy announced in mid-
2017. The strategy includes a number of revenue and expenditure
items, such as raising the VAT rates and excise taxes, as well as
controlling public employment levels and spending efficiency.
Most of the measures have received parliamentary approval as
planned within the confines of the 2018 budget.

S&P said, "In our view, the fiscal targets outlined in the
consolidation strategy are overly optimistic and unlikely to be
achieved. Under the fiscal strategy, the government planned to
reduce the general government deficit to 1.8% of GDP in 2018
before turning to a surplus from 2019. We have not changed our
fiscal forecasts and maintain that Montenegro's deficit will
equate to 4% of GDP in 2018-2019 before reducing from 2020.
However, we note that budgetary performance appears to have
slipped compared with original government targets. Over the first
half of 2018, the general government deficit had already reached
about 2% of GDP, above the original full-year target.

"We understand that several developments have contributed to this
outcome. These have included the difficulty in implementing the
higher excise taxes adopted at the beginning of the year because
tax evasion has intensified. As a result, the authorities had to
reduce excises in an attempt to bolster collections. In addition,
salaries have been adjusted for some public sector employees."

In addition to weaker headline fiscal performance, the government
made a one-off payment of about EUR70 million (1.6% of GDP) to
Italian utility company A2A. The payment relates to A2A's option
that allowed it to exit its stake in Montenegrin electricity
company EPCG and receive compensation from the government. S&P
has not included this one-off expenditure within the 2018 general
government deficit but instead accounted for it below the line.
The increase in net general government debt in our projections
for 2018 is therefore higher than the headline deficit implies.

More broadly, downside risks to the government's 2017 fiscal
consolidation strategy could come from potential cost overruns on
the first section of the highway, difficulty in controlling
spending ahead of 2020 general elections, potential expenditure
overruns at the local government level, and negative consequences
in case of lower-than-expected growth.

S&P said, "Given our base-line forecast of continued gradual
fiscal consolidation, we expect net general government debt will
peak at 65% of GDP in 2019 and reduce thereafter. Positively,
refinancing risks have reduced, in our view. Montenegro
previously faced Eurobond redemptions totaling a substantial
EUR1.1 billion over 2019-2021. In April 2018, the government
issued a EUR500 million Eurobond that was partly used to buy back
EUR360 million of debt maturing over 2019-2021. Moreover, in May,
the authorities secured a World Bank guarantee-supported
syndicated loan of EUR250 million. The Montenegrin government
also plans to use the proceeds of the loan to meet debt
redemptions coming due over the next three years. Montenegro
primarily finances fiscal shortfalls on the foreign markets and
close to 70% of commercial debt is held by non-residents. We
expect this to remain the case in the future, which exposes the
country to risks of European Central Bank (ECB) tightening
monetary policy."

Montenegro's weak balance-of-payments position remains a key
ratings constraint. The country has consistently posted double-
digit current account deficits and S&P estimates the net external
liability position totaled close to 250% of GDP at the end of
2017. Positively, Montenegro has seen substantial amounts of
inbound foreign direct investment, averaging over 10% of GDP over
the past five years. These investments are concentrated in real
estate, tourism, and energy sector projects, and tend to be
import-intensive. As such, the investments actually cause the
current account to be in a recurrent deficit. Yet risks remain as
the economy would contract if foreign direct investment
unexpectedly dries up.

Moreover, Montenegro's external accounts show persistent and
positive errors and omissions, which--following recent data
revisions--average 2.5% of GDP over the past five years. These
discrepancies may reflect unrecorded tourism export revenues and
the underestimation of remittances from the large Montenegrin
diaspora, among other factors. This could mean that the current
account deficit may be lower than the reported data indicate. S&P
said, "We also have limited information on Montenegro's external
assets, and, as such, external ratios are likely to indicate
higher net leverage than is actually the case. We understand that
the authorities are in the final stages of producing
comprehensive International Investment Position statistics, which
they plan to publish by the end of the year. The work to improve
external statistics is ongoing; this year both the current
account deficit and net errors and omissions (E&O) have been
restated and adjusted downward. We note that in the past, net E&O
amounted to a more substantial average of 5% of GDP over recent
years compared with the current 2.5%."

Montenegro's unilateral adoption of the euro prevents the Central
Bank of Montenegro from setting interest rates and controlling
the money supply, and restricts its ability to act as a lender of
last resort. While the central bank has some options to provide
liquidity support to banks, its inability to create the currency
needed in a stress scenario effectively prevents it from
fulfilling a lender of last-resort function, in S&P's view.
Unilateral euro adoption also makes the country's economy highly
sensitive to cross-border capital movements.

Montenegro's banking system appears broadly stable and liquid.
Nonperforming loans have declined to around 7% of the total,
compared to 20% in 2013. S&P said, "Nevertheless, although the
larger institutions are in a better position, we understand a
number of smaller banks could be vulnerable. We still view the
government's contingent liabilities from the banking system as
limited, since we believe that only minimal support to cover the
insured deposits would be provided in the event of a bank
default."

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision. After the primary analyst gave opening remarks and
explained the recommendation, the Committee discussed key rating
factors and critical issues in accordance with the relevant
criteria. Qualitative and quantitative risk factors were
considered and discussed, looking at track-record and forecasts.

The committee agreed that all key rating factors were unchanged.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.

  RATINGS LIST
  Ratings Affirmed

  Montenegro
   Sovereign Credit Rating                  B+/Stable/B
   Transfer & Convertibility Assessment     AAA
    Senior Unsecured                        B+


=====================
N E T H E R L A N D S
=====================


ALPHA AB: Moody's Assigns First-Time B3 CFR, Outlook Stable
-----------------------------------------------------------
Moody's Investors Service has assigned a first-time B3 corporate
family rating and a B3-PD probability of default rating to Alpha
AB Bidco B.V., an intermediate holding company of Netherlands-
based Ammeraal Beltech and Italian Megadyne Group. Concurrently,
Moody's has assigned B2 instrument ratings to the group's
proposed EUR830 million senior secured Term Loan B (TLB, maturing
2025) and proposed EUR150 million senior secured revolving credit
facility (RCF, maturing 2025). Moody's has withdrawn the B3 CFR
and B3-PD PDR, assigned to AI Alabama Midco B.V., the existing
holding company of Ammeraal. The outlook on all ratings is
stable.

The new financing, in combination with common equity, will be
used to fund the acquisition by Partners Group of Ammeraal and
Megadyne from Advent International and Astorg Partners,
respectively, and to cover transaction related fees and expenses.
The transactions have been closed on September 11, 2018 after
having obtained all anti-trust and regulatory approvals. Moody's
will withdraw the instrument ratings assigned to the outstanding
debt raised by AI Alabama B.V., the current borrowing entity of
Ammeraal, after their repayment.

"The assigned B3 CFR, strongly positioned in this rating
category, with a stable outlook balances the group's high initial
leverage pro forma for the acquisitions, moderate free cash flow
generation and some integration risks, with its leading positions
in the global light-weight belting markets, sound business model
and expected earnings improvements thanks to merger related
synergies", says Goetz Grossmann, Moody's lead analyst for Alpha.

RATINGS RATIONALE

The B3 CFR rating primarily reflects (1) the combined group's
leading and defensible, albeit still not dominant, positions in
the relatively fragmented markets of light-weight conveyor and
transmission belts, (2) an integrated business model
(manufacture, fabrication, servicing), high product quality,
innovation and entrenched customer relationships, ensuring a
large proportion of recurring replacement revenues, which provide
some degree of earnings stability, (3) expected profitability
improvements thanks to cross-selling opportunities given a
largely complementary product offering and go to market model of
both acquired entities, and substantial additional synergies
identified by management, (4) a diverse range of end-markets and
global geographic reach, and (5) favorable demand fundamentals in
the light-weight and specialist transmission belting markets with
management-expected growth rates of 4-5% over the medium term.

The rating is however constrained by (1) the high Moody's-
adjusted 7.7x debt/EBITDA ratio at closing and the high interest
costs associated with the substantial debt to finance the
acquisitions, which constrain free cash flow generation and
leaves de-leveraging largely dependent on constant earnings
growth (2) the group's exposure to some end-market cyclicality
(e.g. automotive, tyre, industrial, logistics), which has caused
an almost 20% EBITDA decline in 2009, albeit followed by a swift
recovery thereafter, (3) intense competition in a fragmented
market, (4) exposure to foreign currency risks, given strong
international presences in North America (about one quarter of
group sales), which is somewhat mitigated by the issuance of the
second lien debt denominated in USD, (5) integration risks,
considering the proposed merger of equals, besides a number of
recent bolt-on acquisitions, will require high management
attention and efforts and potentially some extra implementation
costs.

LIQUIDITY

Pro forma for the contemplated transaction, Moody's considers the
group's liquidity as solid. Together with a relatively modest pro
forma cash balance of around EUR45 million (around EUR20 million
of which restricted) at transaction closing as of June 30, 2018,
projected annual funds from operations of more than EUR80 million
are sufficient to cover all basic short-term cash uses of the
group. Such cash needs mainly include capital expenditures of
around EUR28 million in 2019 (of which about one third for
expansion projects), working capital spending of EUR10-15 million
per annum, as well as outstanding payments for recent bolt-on
acquisitions by Ammeraal and Megadyne.

The liquidity assessment also reflects full access to the
proposed new EUR150 million RCF, which Moody's expects to remain
undrawn at transaction closing, but to be utilized from time to
time to finance working capital needs and/or potential further
bolt-on acquisitions. The agency also notes that the group
currently has an up to EUR30 million factoring scheme in place to
finance its working capital requirements.

Moody's understands that there will be one springing covenant
negotiated in the new senior facilities agreement (senior secured
net leverage ratio) with ample initial headroom, which needs to
be tested if the RCF is drawn by more than 40%.

STRUCTURAL CONSIDERATIONS

In Moody's loss-given-default (LGD) assessment, the proposed
senior secured EUR830 million TLB and EUR150 million RCF (both
maturing 2025) rank pari passu, share the same security interest
(mainly share pledges and intercompany receivables) and are
guaranteed by certain subsidiaries of the group accounting for
around 60% of consolidated EBITDA. The B2 ratings on the senior
secured instruments reflect their priority ranking ahead of
subordinated debt with some loss absorption from the $186 million
senior secured second lien facility.

The USD186 million senior secured second lien loan (due 2026) is
secured by the same collateral and shares the same guarantors as
the senior secured credit facilities on a subordinated basis.
Trade payables, pension obligations and short-term lease
commitments are ranked first together with the senior secured TLB
and RCF. In addition the EUR35 million senior unsecured working
capital facilities rolled over as part of the proposed
transaction is ranked first.

RATING OUTLOOK

The stable outlook reflects its expectation of organic topline
growth at least in line with market growth at around 4%, gradual
slight expansion in profit margins and positive free cash flow
generation, which should support de-leveraging towards 6.5x gross
debt/EBITDA (Moody's-adjusted) over the next 18 months.

WHAT COULD CHANGE THE RATING DOWN / UP

Upward pressure on the ratings would build, if (1) Moody's-
adjusted debt/EBITDA declined sustainably towards 6x, and (2)
EBITA margins improved towards 20% on a sustained basis.

Though unlikely at this point despite some integration risks,
downward pressure on the ratings would arise, if (1) interest
coverage weakened towards 1x EBITA/interest (Moody's-adjusted),
(2) FCF turned sustainably negative, and/or (3) the liquidity
position deteriorated.

The principal methodology used in these ratings was Global
Manufacturing Companies published in June 2017.

Alpha AB Bidco B.V. is an intermediate holding entity of the
planned combined Ammeraal Beltech / Megadyne group, based in
Alkmaar, the Netherlands. In July 2018, private investment
manager Partners Group has agreed to acquire Ammeraal Beltech and
Megadyne Group for a total enterprise value of around EUR 2.1
billion. The group is a global producer of light-weight belting
products with activities spanning from manufacturing,
fabrication/assembly to sales and servicing of synthetic and
modular conveyor belts (around 45% of combined group sales),
industrial power transmission belts (35%), specialty belts and
others (20%). It serves a variety of end markets including
industries such as food, logistics, industrials, automotive,
airports, elevator, paper and print with customers representing
both OEMs, end-users and independent distributors. In 2017, the
combined group generated EUR690 million of sales and EBITDA of
EUR133 million with more than 4,600 employees.


ALPHA AB: Fitch Assigns 'B(EXP)' Long-Term IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has assigned Alpha AB Bidco BV a first-time
expected Long-Term Issuer Default Rating (IDR) of 'B(EXP)' with a
Stable Outlook, and an expected senior secured rating of
'B+(EXP)'/'RR3'/60% to its EUR830 million seven-year senior
secured covenant-lite Term Loan B (TLB).

The IDR of Alpha AB Bidco BV (Ammeraal Beltech and Megadyne SpA
combined) reflects Fitch's expectation of stable revenue and
profits for the combined group over the rating horizon. Ammeraal
and Megadyne will form a global manufacturer of conveyer and
power transmission belts with little product overlap and FY17 pro
forma EBITDA of EUR132.5 million. However, the rating also
reflects the high leverage at closing of the proposed
transaction.

The conversion of the IDR into final ratings is conditional upon
the Megadyne acquisition going ahead and the expected TLB rating
is conditional upon issuing this debt instrument and its final
terms and conditions being in line with information already
received.

KEY RATING DRIVERS

Megadyne Acquisition, Strategic Fit: The combination of Ammeraal
and Megadyne brings together a complementary product range of
conveyor belts and power transmission belts, a recurring income
stream from aftermarket sales and above-inflation organic growth
prospects. The combined group exhibits a diverse product
portfolio, geographic footprint and customer base. Fitch believes
that Ammeraal and Megadyne have largely avoided commoditised belt
applications where pricing power is weak and, instead, focused on
markets where their expertise and experience is acknowledged and
pricing power is enhanced.

Fitch also views the execution risk of the merger as moderate.
Under Partners Group's ownership, Fitch expects management will
focus on targeted synergies of around EUR20 million within 24
months, coming from operational efficiencies, which Fitch
believes are reasonable.

Supportive Product Demand, Diversification: Ongoing
industrialisation in many sectors requires more automation such
that growth prospects are positive across various geographies.
The enlarged group's end-market exposure is diverse, spanning
food manufacturing, logistics (including packaging), industrial
processes, household goods and elevators. Fitch expects growth to
come from increasing application and installation of belt
products to support the rise of automation in industrial
processes, and greater precision and efficiency requirements from
original equipment manufacturers. Aftermarket revenue (a large
majority of turnover) feeds off the group's initial installation
of the equipment with recurring requirements for replacement and
upgrading of belts. Ammeraal's and Megadyne's ability to retain
customers historically should support earnings resilience over
the rating horizon.

Cash-Generative Profile: The group exhibits a stable, profitable
and cash-generative financial profile. The capex-light nature of
the business (which represents less than 5% of sales) and free
cash flow margin (FCF), which Fitch expects to be above 5% of
sales over the rating horizon, help to compensate for the high
leverage. Profit and cash flow stability is also underpinned by
raw materials (such as oil, rubber, ethanol) representing around
23% of turnover and being largely passed onto customers as well
as the group's ability to flex costs in downturns.

Highly Leveraged Capital Structure: At closing of the
transaction, Fitch expects the FFO adjusted gross leverage to be
8.5x, a clear constraining factor for the rating. The rating
assumes the combined group will maintain a disciplined financial
policy, with no dividends, no further transformative M&A, such
that Fitch forecasts FFO lease-adjusted gross leverage will
decrease towards 6.0x by 2022. Any deviation from this
deleveraging path, for example because of debt-funded and/or
margin-dilutive M&A, may lead to a negative rating action.

DERIVATION SUMMARY

The merger of Ammeraal and Megadyne should allow the combined
entities to achieve greater scale and help protect pricing power
thanks to synergies and increased market share in the niche belt
manufacturing segment. Although the group's direct competitors
are larger and more-diversified manufacturers, Fitch calculates
that their belting segment is smaller or equal to the equivalent
production capacities within the combined group. On the belt
segment, the combined group faces direct competitors like Forbo,
Rexnord and Gates even though these peers are bigger and more
diversified.

The combined group is also much smaller and has far more leverage
than US industrial conglomerates, such as Xylem, the Timken
Company and Flowserve, which are all investment grade companies.

Fitch believes that the combined group sits well within the 'B'
category, relative to Fitch's EMEA portfolio of Industrial &
Manufacturing credit opinions. Despite a high initial leverage
that is more consistent with a 'B-' rating, Alpha AB Bidco BV's
size, profitability, FCF margin and deleveraging profile support
a 'B' rating.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  - 3.5% to 4% annual sales growth for Ammeraal Beltech and
Megadyne over the next three to four years driven by strong
demand, recurring customers with aftermarket sales, bolt-on
acquisitions and potential cross-selling of products to the wider
customer base.

  - Slightly improving EBITDA margins, thanks to margin
convergence of less-profitable geographies towards 20% on average
for the combined entities. Few comparable peers, where figures
are disclosed, reach these margins of above 20%.

  - EUR20 million cost synergies per year by 2020.

  - 3.5% capex as a percentage of sales in line with the
historical average.

  - Working capital outflow equivalent to 2% of sales.

  - EUR15 million cash spent on acquisitions per year, financed
by internally generated funds.

  - No dividend.

  - No additional transformative acquisition.

KEY RECOVERY ASSUMPTIONS

Bespoke Approach: Fitch has undertaken a bespoke recovery
analysis in line with its criteria. Under a going concern
restructuring scenario, Fitch has stressed its projected FY19
EBITDA of EUR167 million to derive a post-restructuring EBITDA of
EUR125 million.

Fitch has applied a distressed enterprise value (EV) multiple of
5.5x which reflects a significant discount from the EV/EBITDA
multiple paid for Megadyne and the current trading multiple of
peers including Forbo, Rexnord and Gates (all ranging from 11x to
13x). Assuming some EUR14 million of local debt with non-
guarantor group entities ranks super-senior to the TLB, and
assuming the RCF is fully drawn as per its criteria, the recovery
rate estimate for the TLB is 60%, which translates into a
'B+(EXP)'/'RR3' rating for that instrument.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

Planned synergies achieved and retained within the group, with
commitment to de-leverage such that:

  - FFO gross leverage is below 5.0x on a sustained basis.

  - EBITDA margin above 20% on a sustained basis.

  - FFO fixed-charge cover above 2.5x on a sustained basis.

  - FCF above 5% of sales on a sustained basis.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - FFO gross leverage greater than 7.0x on a sustained basis.

  - FFO fixed-charge cover below 2.0x on a sustained basis.

  - EBITDA margin below 15% on a sustained basis.

  - Neutral-to-negative FCF on a sustained basis.

  - Debt-funded acquisition activity increasing the risk profile
of the group.

LIQUIDITY

Long-Dated Capital Structure: The issuer plans to issue a EUR830
million seven-year senior secured covenant-lite TLB and EUR-
equivalent 160 million (USD186 million) eight-year second lien
facility. The proposed TLB has guarantors constituting around 63%
of group EBITDA, which is weak compared with market standards. At
closing, cash is expected to be EUR45 million (of which
jurisdiction-related restricted cash is EUR21 million).
Management expects the 6.5-year EUR150 million RCF to be largely
undrawn, although it could be used to fund acquisitions. The RCF
may also be used to refinance local debt of EUR35 million with
various group entities that will exist at closing.

FULL LIST OF RATING ACTIONS

Alpha AB Bidco BV

  - Long-Term IDR: assigned at 'B(EXP)'/Stable;

  - Senior Loan Long-Term Rating: assigned at
'B+(EXP)'/'RR3'/60%.


BARINGS EURO 2018-2: Fitch Assigns B- Rating to Class F Debt
------------------------------------------------------------
Fitch Ratings has assigned Barings Euro CLO 2018-2 B.V. final
ratings, as follows:

EUR229 million Class A-1A: 'AAAsf'; Outlook Stable

EUR5 million Class A-1B: 'AAAsf'; Outlook Stable

EUR14 million Class A-2: 'AAAsf'; Outlook Stable

EUR8 million Class B-1A: 'AAsf'; Outlook Stable

EUR10 million Class B-1 B: 'AAsf'; Outlook Stable

EUR15 million Class B-2: 'AAsf'; Outlook Stable

EUR13.3 million Class C-1: 'Asf'; Outlook Stable

EUR15 million Class C-2: 'Asf'; Outlook Stable

EUR18 million Class D: 'BBBsf'; Outlook Stable

EUR30 million Class E: 'BBsf'; Outlook Stable

EUR12.5 million Class F: 'B-sf'; Outlook Stable

EUR36.7million subordinated notes: not rated

Barings Euro CLO 2018-2 B.V. is a securitisation of mainly senior
secured loans (at least 90%) with a component of senior
unsecured, mezzanine, and second-lien loans. A total note
issuance of EUR406.5 million has been used to fund a portfolio
with a target par of EUR400 million. The portfolio will be
managed by Barings (U.K) Limited. The CLO envisages a 4.1-year
reinvestment period and an 8.5-year weighted average life (WAL).

KEY RATING DRIVERS

'B' Portfolio Credit Quality

Fitch places the average credit quality of obligors in the 'B'
range. The Fitch-weighted average rating factor (WARF) of the
identified portfolio is 32.57.

High Recovery Expectations

At least 90% of the portfolio comprises senior secured
obligations. Recovery prospects for these assets are typically
more favourable than for second-lien, unsecured and mezzanine
assets. The Fitch-weighted average recovery rating (WARR) of the
identified portfolio is 65.46%.

Diversified Asset Portfolio

The manager can interpolate between two matrices for a top 10
obligors level of 16% and 26.5%. The transaction also includes
limits on maximum industry exposure based on Fitch industry
definitions. These covenants ensure that the asset portfolio will
not be exposed to excessive concentration.

Portfolio Management

The transaction features a 4.1-year reinvestment period and
includes reinvestment criteria similar to other European
transactions. Fitch's analysis is based on a stressed-case
portfolio with the aim of testing the robustness of the
transaction structure against its covenants and portfolio
guidelines.

Cash Flow Analysis

Fitch used a customised proprietary cash flow model to replicate
the principal and interest waterfalls and the various structural
features of the transaction, and to assess their effectiveness,
including the structural protection provided by excess spread
diverted through the par value and interest coverage tests.

RATING SENSITIVITIES

A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of up to two notches for the rated
notes. A 25% reduction in recovery rates would lead to a
downgrade of up to five notches for the rated notes.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.

DATA ADEQUACY

The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other
Nationally Recognised Statistical Rating Organisations and/or
European Securities and Markets Authority-registered rating
agencies. Fitch has relied on the practices of the relevant
groups within Fitch and/or other rating agencies to assess the
asset portfolio information.

Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis according to its applicable
rating methodologies indicates that it is adequately reliable.


GBT III BV: S&P Assigns 'BB' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issuer credit rating to
Netherlands-based travel management company GBT III B.V. (GBT).
The outlook is stable.

S&P said, "We also assigned our 'BBB-' issue rating to GBT's $250
million senior secured term loan B, issued by GBT's 100% owned
subsidiary, GBT Group Services B.V. The '1' recovery rating
indicates our expectation of 95% recovery prospects in the event
of a payment default."

The ratings are in line with the preliminary ratings we assigned
on July 24, 2018.

With pro forma revenue of $2 billion, GBT is one of the leading
business travel management companies (TMC) -- an industry S&P
considers highly fragmented and competitive in which the top five
players represent less than 10% of the market. While disruption
has posed risks to this segment of the travel industry since the
launch of online travel agencies (OTAs), the TMC model remains
relevant. Business customers still require a higher level of
service, including access to a variety of content and
flexibility, help establishing and enforcing their clients'
travel policies, out-of-hours customer service, and account
payments. Of the leading OTAs, Expedia Group (through its Egencia
brand) and Booking Holding have a business travel segment, but
they currently focus on small- to medium-sized enterprises, where
online adoption rate is high. Additionally, firms with
substantial financial resources (for example, Google and
Facebook) entering airline and hotel distribution represents a
risk. Therefore, compared with other sectors within wider
business services (which include customer relationship firms,
catering services, security services, and facility management),
S&P considers the risk of technology disruption within the travel
management sector to be relatively high.

A TMC's performance (particularly in terms of the volume of
transactions) is somewhat linked to the level of economic
activity in its country of operation, and is influenced by macro
factors such as economic downturns, natural disasters or
accidents, trade wars, and fuel price volatility. GBT's clients
are large, global, multinational companies with strong
negotiating positions. GBT (like its peers) has faced constant
pricing pressure from its clients as the volume of transactions
processed online (which incur lower costs) has increased.

S&P considers these industry weaknesses to be partly offset by
GBT's strong brand name, its longstanding relationship with
clients and suppliers, customer retention rate of about 96%
(albeit with dilutive price), wide geographic reach, substantial
resources to invest in the business, and EBITDA margin of about
15%, which it considers to be average within the wider business
services industry.

GBT and Carlson Travel Inc are by far the two leading business
TMCs. Their scale and global reach enable them to negotiate
better content from suppliers relative to peers and win clients
with global offices. S&P thinks the acquisition of HRG improves
GBT's competitive position through increased scale, potential
cost synergies, and improved customer diversity. Factors that
somewhat temper this include HRG's reported revenue decline for
the past two years (due to client losses and lower travel spend),
along with the risk of further disruption due to Brexit in the
medium term.

Juweel Consortium's $900 million equity contribution in 2014
improved GBT's financial flexibility, which enabled the group to
invest heavily in its digital content offering and technology, as
well as undertake strategic acquisitions, including Klee Data
System (KDS), Banks Sadler, and HRG.

However, S&P seeks evidence over the medium term that the group
will be able to successfully integrate these acquisitions,
improve client win ratios, and increase its S&P Global Ratings
adjusted EBITDA margins toward 18%-20%, as well as generate
substantial free operating cash flow (FOCF).

GBT is a joint venture between American Express Company and an
investor consortium (Juweel Consortium) led by Certares. S&P
said, "We understand both partners will remain invested in the
business in the medium term as GBT completes its migration from
American Express Company systems, and provide the necessary
continuity for the company to reap the benefits from the
strategic steps taken in the past four years. That said, we do
not consider either entity to be a strategic long-term partner,
and we think these investors will likely exit the business at an
opportune time. However, we do take into account the owner's
communicated financial policy to maintain gross debt to EBITDA
below 1.0x (which translates to adjusted debt to EBITDA of about
2x-3x)."

S&P  said, "We calculate the group's adjusted debt to be about
$350 million, comprising $250 million of the term loan B
facility, $220 million of pension deficit (which largely relates
to HRG), and an operating lease adjustment of about $130 million
(offset by our surplus cash adjustment of about $250 million).

"We consider the group's discretionary cash flow (DCF) to debt
ratio to be a key ratio along with adjusted debt to EBITDA and
funds from operations (FFO) to debt. This is because GBT
distributes dividends to its owners to enable them to pay their
respective annual tax liabilities arising from GBT investments.
We calculate GBT's DCF to debt to be about 20% for the next two
years, which indicates a slightly weaker credit profile than that
reflected by its adjusted debt to EBITDA metrics of 1.5x."

S&P's base case assumes:

-- GDP growth in main markets (U.S. and Europe) should support
    demand fundamentals for GBT given that business travel is
    generally tied to economic growth. S&P said, "We forecast
    global GDP growth at 3.9% in 2018 and 2019, with U.S. GDP
    growing by 3.0% in 2018 and 2.5% in 2019, and eurozone GDP
    growing by 2.1% and 1.7% in 2018 and 2019, respectively. We
    expect GBT stand-alone business will maintain a net win ratio
    above 1.0x.However, we forecast the net win ratio for HRG's
    stand-alone business will continue to decline as a result of
    its clients' reduced activity levels."

-- S&P said, "We therefore forecast the group's pro forma
     revenue for combined entity for the full year to be about
     $2.0 billion. For 2019, we forecast revenue growth of between
    negative 2% and positive 2%, which incorporates potential
    disruption caused by Brexit."

-- S&P forecasts a pro forma EBITDA margin of about 13%-14% in
     2018, compared with 12% in 2017, and margins to improve to
     15% in 2019 as the early benefits of HRG cost synergies begin
     to materialize.

-- Disintegration costs and HRG transaction costs of about $80
    million in 2018.

-- No material acquisition over next two years.

-- Annual contribution of about $30 million toward pension
    deficit.

-- Capital expenditure (capex) of about $70 million, including
    $35 million of capitalized development that we treat as an
    operating expense.

-- Dividend payments of about $10 million in 2018 and $70
    million in 2019.

Based on these assumptions, S&P arrives at the following credit
measures:

-- Adjusted debt to EBITDA of about 1.5x in 2018 and 1.2x in
    2019;
-- FFO to debt about 60% in both years; and
-- DCF to debt of about 20%-25% in the next two years.

S&P said, "The stable outlook reflects our view that the group's
stated financial policy and current low leverage of about 1.5x
will provide the group with sufficient headroom over the next 12
months to integrate the HRG acquisition and finalize its
remaining investments to complete its disintegration from
American Express Company. It also reflects our view that the
group will maintain stable operating performance and generate
meaningful FOCF of about $100 million (before disintegration
costs).

"We could lower the rating if the group's credit metrics were to
materially deteriorate, including debt to EBITDA rising above
3.0x or DCF to debt deteriorating below 10%. Such a scenario
could stem from a material disruption in the business travel
segment, loss of clients, or exceptional costs exceeding our
current expectation. Additionally, we could take a downward
rating action if GBT carried out material debt-financed
acquisitions or if shareholder distribution exceeded the tax
distribution amount indicated.

"We consider an upgrade unlikely over the next 12 months due to
GBT's participation in the consolidation of the business TMC
sector, with ongoing bolt-on acquisitions eroding any rating
headroom arising from positive operating performances. GBT's
guided gross leverage target of 1.0x (about 2.0x-3.0x on an
adjusted basis) limits ratings upside."


===========
P O L A N D
===========


GETBACK SA: KNF Regulator to Meet with Creditors
------------------------------------------------
Maciej Martewicz at Bloomberg News, citing Dziennik Gazeta
Prawna, reports that KNF regulator was expected on Sept. 17 to
take part in meeting between troubled debt collector GetBack and
its creditors, including banks.

According to Bloomberg, GetBack asked KNF to help persuade banks
to give up part of their secured debt in order for other
creditors to get smaller haircut in restructuring talks.

GetBack SA is a Polish debt collector.



===========
R U S S I A
===========


GLOBEXBANK: Fitch Affirms BB- LT IDR, Outlook Stable
----------------------------------------------------
Fitch Ratings has affirmed Globexbank's (GB) Long-Term Issuer
Default Ratings (IDRs) at 'BB-' with Stable Outlook. Fitch has
simultaneously withdrawn the ratings for commercial reasons and
will no longer provide rating and analytical coverage of GB.

KEY RATING DRIVERS

On August 9, 2018, the ultimate shareholder of GB, state-owned
Vnesheconombank (VEB; BBB-/Positive), decided to merge GB with
its other subsidiary, Sviaz-Bank (SB; BB-/Stable, b-). According
to GB's management, the legal merger will be completed in October
2018, as a result of which GB will cease to exist as a separate
legal entity.

The affirmation of GB's Long-Term IDRs and Support Rating at 'BB-
' and '3', respectively, (in line with SB's) reflects Fitch's
view that prior to the merger GB is likely to be supported by VEB
in case of need and the level of that support is aligned with
that of SB. This view is supported by (i) the banks' full
ownership by VEB; (ii) the track record of equity and liquidity
support to date; (iii) potentially high reputational risk for VEB
in case of them defaulting; and (iv) the post-merger bank likely
qualifying as a principal subsidiary for VEB as per the cross-
default clause in its loan participation note programme
documentation.

At the same time, Long-Term IDRs of both banks are three notches
below those of VEB due to their limited role and importance for
VEB's execution of its development role and the VEB's intention
to eventually sell the post-merger bank.

The affirmation of GB's Viability Rating (VR) at 'b-' reflects
limited changes to the bank's credit profile since the last
rating action in May 2018. The VR reflects the bank's significant
asset quality risks stemming from sizable problem assets,
including the bank's real estate investments, and weak operating
performance. At the same time, the rating benefits from GB's
recently improved capital and liquidity positions.

RATING SENSITIVITIES

Not applicable

The following ratings have been affirmed and withdrawn:

Long-Term Foreign- and Local Currency IDRs: 'BB-'; Outlooks
Stable

Short-Term Foreign Currency IDR: 'B'

Support Rating: '3'

Viability Rating: 'b-'


KOMI REPUBLIC: Fitch Affirms Then Withdraws 'BB-' LT IDR
--------------------------------------------------------
Fitch Ratings has affirmed Russian Republic of Komi's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'BB-' with Positive Outlooks and Short-Term Foreign-Currency IDR
at 'B'. The republic's senior unsecured debt long-term rating has
been affirmed at 'BB-'.

At the same time, the agency has withdrawn all Komi's ratings for
commercial reasons, and will no longer provide ratings or
analytical coverage for the issuer.

KEY RATING DRIVERS

Fiscal Performance Assessed as Neutral/Stable

Komi restored its budgetary performance in 2017 and this trend
continued in 1H18. During 1H18 Komi collected 55% of revenue
budgeted for the full year and incurred 46% of full-year
expenditure, resulting in a mid-year surplus of RUB3 billion.
This was driven by improved corporate income tax (CIT) and
property taxes proceeds, which increased 19% and 27% yoy,
respectively.

Fitch's rating case scenario envisages an acceleration in
expenditure (particularly capital spending) in 2H18 and forecasts
a full-year deficit before debt variation of about RUB2.2 billion
or 3.2% of total revenue, which is moderate deterioration from
the exceptionally strong budget surplus of 4.7% in 2017. However
Fitch expects the region will maintain a deficit on average 3%
over the medium term, which is a notable improvement from the
large deficit of 13.7% in 2014-2016.

Fitch projects Komi's operating balance will moderately
deteriorate in 2018 after an exceptionally strong 15% margin in
2017 (2014-2016: on average -1.8%). However, Fitch expects the
region to see a 5%-6% operating margin in the medium term, which
will be sufficient to cover interest payments. This is
underpinned by Komi administration's intention to streamline
expenditure and by an expected improvement in major tax proceeds,
particularly personal income tax, CIT and property taxes, which
altogether account for more than 90% of total tax revenue.

Direct Debt and other Long-Term Liabilities Assessed as
Neutral/Stable

Fitch projects Komi's direct risk will remain below 65% of
current revenue in 2018-2020. At end-2017 direct risk totalled
RUB38 billion, down from RUB41.2 billion in 2016. As of August 1,
2018, direct risk had further declined to RUB37 billion, due to
the interim surplus. Absolute debt decline and strong revenue
growth led to a significant debt burden reduction to 55% after a
prolonged period of rapid debt growth. During 2013-2016 debt
increased significantly, due to an ongoing budget deficit. It
peaked at 70.3% of current revenue at end-2016.

As with most Russian regions, Komi is a participant in the budget
loan restructuring programme initiated by the federal government
at end-2017, easing immediate refinancing pressure. According to
the programme, the maturity of RUB6.9 billion budget loans
granted to the region has been extended until 2024, with most
repayments scheduled at the end of maturity. This will help save
on interest payments and free the region from refinancing in the
capital market of these loans in the medium term. At the same
time, the administration does not expect any new budget loans
from the federal government in 2018-2020.

Komi has a favourable debt structure, which is dominated by long-
term bonds (62% of direct risk at August 1, 2018), followed by
low-cost budget loans (20%) and bank loans (6%). The remaining
liabilities are represented by short-term federal treasury
facilities that will be refinanced by bank loans by year-end. The
debt maturity profile is stretched to 2034, but market debt
(bonds and bank loans) maturities are concentrated in 2018-2024.
This leads to a weighted average life of debt of about four
years, which is short by international comparison.

Management and Administration Assessed as Neutral/Stable

Komis' debt policy is sophisticated compared with national
peers'. The administration relies on long-term bonds and actively
uses available low-cost debt instruments (90-day treasury loans
and federal loans at near-zero rates) to capture interest
savings. Fitch assumes that no significant changes will be made
to the budgetary practice over the medium term.

The administration aims to reduce debt in the medium term and
budgets a surplus for 2019-2020. However, the region's budget is
subject to the discretionary powers of the federal authorities,
which hamper the administration's forecasting ability.

Economy Assessed as Neutral/Stable

Komi has a sound economy by national comparison, with its GRP per
capita almost twice as high as the national median and the
average salary about 50% above the national median. However, the
economy is concentrated in the natural resources sector, which
exposes the region to commodity price fluctuations and potential
changes in fiscal regulation.

Institutional Framework Assessed as Weakness/Stable

The republic's credit profile remains constrained by the weak
institutional framework for Russian local and regional
governments (LRGs), which has a shorter record of stable
development than many of its international peers. Weak
institutions lead to lower predictability of Russian LRGs'
budgetary policies, which are subject to the federal government's
continuous reallocation of revenue and expenditure
responsibilities within government tiers.

RATING SENSITIVITIES

Not applicable.


MTS BANK: Fitch Hikes Long-Term IDR to BB-, Outlook Negative
------------------------------------------------------------
Fitch Ratings has upgraded MTS Bank's (MTSB) Long-Term Issuer
Default Rating (IDR) to 'BB-' from 'B+' and Support Rating to '3'
from '4'. The Outlook is Negative.

KEY RATING DRIVERS

IDRS AND SUPPORT RATING

The upgrade of MTSB's IDR and Support Rating follows the increase
of the ownership stake in the bank by PJSC Mobile TeleSystems
(MTS, BB+/Negative) to 55% from 27%. In Fitch's view, as a
majority shareholder, MTS will have a strong propensity to
support the bank given (i) its shared brand; (ii) potential
synergies from further integration of the bank with the telecom
business. MTS is expected to consolidate MTSB in its financial
accounts starting from 3Q18, which will increase the reputational
risk for the parent if MTSB defaults.

The two-notch difference between the ratings of MTS and MTSB
reflects the subsidiary's focus on a different segment (banking
rather than telecom services), its limited franchise and
therefore strategic importance for the parent, and its weak
performance track record.

To date, Fitch has factored in support from Sistema Public Joint
Stock Financial Corporation (Sistema, BB-/Negative, MTS' ultimate
shareholder), mainly based on the track record of capital support
(including RUB15 billion of equity provided in 2016) and MTSB's
role as a treasury bank for the group.

The Negative Outlook on the bank mirrors that on its parent.

RATING SENSITIVITIES

IDRS AND SUPPORT RATING

The bank's support-driven IDR could be downgraded if MTS is
downgraded or if it fails to provide timely and sufficient
support, if needed. MTSB could be upgraded if MTS is upgraded or
if integration between the two entities increases significantly.

The rating actions are as follows:

Long-Term IDR upgraded to 'BB-'from 'B+', Negative Outlook

Short-Term IDR affirmed at 'B'

Viability Rating: 'b', unaffected

Support Rating upgraded to '3' from '4'


YAROSLAVL REGION: Fitch Affirms BB- LT IDRs, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Russian Yaroslavl Region's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'BB-' and Short-Term Foreign-Currency IDR at 'B'. The Outlook is
Stable. The region's senior debt ratings have been affirmed at
long-term local currency 'BB-'.

The 'BB-' ratings reflect Yaroslavl's moderate social-economic
profile and Russia's weak institutional framework for sub-
nationals. They also reflect the region's improving fiscal
performance and stabilised direct risk.

KEY RATING DRIVERS

Institutional Framework (Weakness/Stable)

The region's credit profile remains constrained by the weak
institutional framework for Russian local and regional
governments (LRGs), which has a shorter record of stable
development than many of the region's international peers. The
predictability of Russian LRGs' budgetary policy and overall
resource planning horizon is hampered by frequent reallocation of
revenue and expenditure responsibilities between government
tiers.

Fiscal Performance (Weakness/Positive)

Fitch projects Yaroslavl will continue to improve its budgetary
performance, with an operating balance above 5% in 2018-2020
(2017: 2.9%) and a current balance sufficient to cover expected
interest payments. The region's interim fiscal performance as of
end-July 2018 was satisfactory with tax collection at 59% of the
budgeted full-year tax revenue and a minor overall budget deficit
of RUB142 million. Fitch projects Yaroslavl to record a full-year
deficit before debt variation at about 1% over the medium term.

Debt and Other Long-Term Liabilities (Neutral/Stable)

Fitch projects the region's direct risk to consolidate at about
60% of current revenue in 2018-2020 (2017: 64%). Yaroslavl's
current debt structure as of end-July 2018 was dominated by
domestic bonds (52% of total direct risk stock), followed by low-
cost federal budget loans (41%) and bank loans (7%). The region
has coverage of most of its immediate refinancing risk, following
a RUB3 billion issue of a seven-year domestic bond on July 30,
2018. The region's debt amortisation profile is fairly smooth and
even until 2034, while the average life of the region's debt as
of August 1, 2018 stood at five years (2017: 5.1 years).

Management and Administration (Neutral/Stable)

The regional administration has a prudent debt management policy
aimed at maintaining a manageable debt portfolio and restoring
the region's budget to satisfactory performance. The region's
budgeting approach is quite conservative, resulting in smaller-
than-expected deficit outturns. Fitch assumes continuity in these
policies and practices over the medium term.

Economy (Neutral/Stable)

The region's economy continues to perform in line with the
national median, as measured by wealth metrics such as gross
regional product (GRP) per capita (7% above the national median
in 2016) and average salary (2% above the national median in
2017). Various sectors of the diversified regional economy
provide Yaroslavl with a broad tax base, while the top 10
taxpayers contributed 35% of the region's tax revenue in 2017.
According to preliminary estimates the region's 2017 GRP grew
3.6% yoy (2016: 1.2%). The administration's base macro-forecast
sees economic growth accelerating to 4%-4.5% yoy in 2018-2020.

RATING SENSITIVITIES

An improvement in the operating balance towards 10% of operating
revenue, coupled with a debt coverage ratio (direct risk-to-
current balance) at around 10 years (2017: 180 years) for a
sustained period, could lead to an upgrade.

Inability to maintain a positive current balance and widening of
the deficit above 10% of total revenue could lead to a downgrade.


===========
T U R K E Y
===========


TURKEY: Central Bank Raises Interest Rates Amid Economic Woes
-------------------------------------------------------------
David Gauthier-Villars and Jon Sindreu at The Wall Street Journal
report that Turkey's central bank sharply raised interest rates
-- defying President Recep Tayyip Erdogan's demand to cut them --
in an attempt to counter the country's economic problems and
reverse growing investor aversion to emerging-market economies.

According to the Journal, the central bank increased its main
interest rate to 24% from 17.75% on Sept. 13, citing concerns
over price stability and saying it would maintain a tight
monetary-policy stance until the inflation outlook improves
significantly.

The turmoil in Turkey has rattled global markets in recent weeks
and comes at a precarious time for developing economies around
the world, just as investors have started to cast doubt on how
long the current period of synchronized global growth can last,
the Journal relates.

Investors are afraid that other emerging nations will eventually
suffer from the same ills as Turkey and Argentina because
increasing global trade frictions and the Federal Reserve's
tightening of monetary policy have driven money away from riskier
countries and into the relative safety of U.S. assets, the
Journal discloses.

The Sept. 13 decision eased but didn't fully dissipate investor
concerns over the central bank's independence from Mr. Erdogan,
whose call for lower rates hours before the rate announcement had
weighed heavily on the lira, the Journal states.

At the heart of Turkey's problem is how to unwind a lending boom
that made it the fastest-growing economy among Group of 20
countries last year, but has left it saddled with one of the
world's biggest piles of private debt -- much of it denominated
in dollars, the Journal notes.

The lira has dropped about 40% this year, making foreign-currency
loans much harder to pay off, the Journal says.  Some analysts
fear that if a series of corporate defaults happen, that would
weigh on banks and threaten a credit contraction, which in turn
could prompt a full-blown economic crisis, the Journal relays.


TURKEY: Issues Decree on Capital Loss for Indebted Companies
------------------------------------------------------------
Selcan Hacaoglu and Taylan Bilgic at Bloomberg News report that
Turkey has issued a decree on capital loss and heavy
indebtedness.

The decree allows heavily indebted companies to merge with firms
that are able to compensate for lost capital, Bloomberg relays,
citing an announcement in the country's Official Gazette.

FX losses due to yet-to-be paid FX liabilities may be disregarded
in calculations regarding capital loss or indebtedness until
January 1, 2023, Bloomberg discloses.

Turkey's lira has lost more than 38% so far this year against the
dollar, causing problems for companies with FX debt, according to
Bloomberg.


VB DPR: S&P Lowers 2011-A Floating-Rate Notes Rating to 'B+'
------------------------------------------------------------
S&P Global Ratings lowered to 'B+' from 'BBB-' its credit rating
on VB DPR Finance Co.'s series 2011-A floating-rate notes.

S&P said, "The downgrade follows our lowering of the long-term
foreign currency sovereign credit rating on Turkey to 'B+' from
'BB-', and the lowering of our issuer credit rating (ICR) on
Turkiye Vakiflar Bankasi TÅrk Anonim Ortakligi (VakifBank), the
originator in this transaction.

"We conducted our full review analysis of the series 2011-A notes
using the most recent transaction information that we have
received (dated June 2018) and the application of our future flow
criteria.

"We reclassified our assessment of the Turkish government's
tendency to support local banks to uncertain from supportive.
Therefore, despite Vakifbank's high systemic importance, we
assess its likelihood to receive an extraordinary government
support in the future as low. According to our future flow
criteria, no rating uplift above the originator's ICR is afforded
to transactions issued by institutions with low likelihood of
receiving extraordinary government support. Our rating on the
series 2011-A notes is therefore capped at VakifBank's ICR, or
'B+'. Consequently, we have lowered to 'B+' from 'BBB-' our
rating on the series 2011-A floating-rate notes."

The transaction is backed by current and future diversified
payment rights (DPRs). DPRs take the form of U.S. dollar-, euro-,
and British pound sterling-denominated payment orders, including
Society for Worldwide Interbank Financial Telecommunication
(SWIFT) MT100 series payment order messages. These payment order
messages are a product of the international financial operations
of VakifBank, one of Turkey's leading banks. Payment orders are
created as a result of VakifBank's role as a financial
intermediary between foreign payers who send funds to Turkey and
resident Turkish entities that receive these funds.


===========================
U N I T E D   K I N G D O M
===========================


DEBENHAMS PLC: Future Hinges on Success of Rescue Fundraising
-------------------------------------------------------------
Ben Marlow at The Telegraph reports that Debenhams is facing a
battle to hold on to the proceeds from a rescue fundraising,
introducing fresh fears about its future.

The retailer is hoping to generate as much as GBP200 million from
the sale of Danish department store Magasin du Nord to prop up
its ailing finances but any deal is expected to face stiff
opposition, The Telegraph discloses.

According to The Telegraph, restructuring experts said lenders
and landlords are likely to demand a big chunk of any proceeds as
they look to cut their exposure to the struggling retailer.
Meanwhile, it has been reported that Mike Ashley may seek to
block the disposal of Magasin du Nord, The Telegraph notes.

Without a cash injection, Debenhams faces a bleak future, The
Telegraph states.


GEORGE BIRCHALL: Poor Trading Conditions Prompt Administration
--------------------------------------------------------------
Business Sale reports that George Birchall Limited, a mechanical
and electrical contracting specialist based in the West Midlands,
has fallen into administration.

According to Business Sale, the company, which had been trading
for nearly 40 years prior to administration, was forced to cease
its operations as a result of "poor trading conditions" following
the cancellation of numerous large orders.

Corporate recovery specialists Butcher Woods, headquartered in
Birmingham, has been appointed as administrators, Business Sale
relates.  To assist them, some members of the George Birchall
staff in the Newcastle-upon-Lyme and Edinburgh offices have been
retained to support the winding down process and with
realisation, Business Sale discloses.

Although the company has ceased trading, its larger maintenance
division and management facilities in London and Newcastle-upon-
Lyme will remain open and continue trading, Business Sale states.
Combined, the company will continue to employ north of 400
people, Business Sale notes.

"Sadly due to its financial position and its inability to meet
ongoing commitments, George Birchall has entered administration.
Butcher Woods is now seeking to maximise realisations for
creditors by seeking to find other ways of fulfilling ongoing
contracts," Business Sale quotes Rod Butcher, director of Butcher
Woods, as saying.


HOMEBASE: Two Top Execs Get Huge Payoffs Despite Failed Overhaul
----------------------------------------------------------------
Alan Tovey at The Telegraph reports that two top executives at
Wesfarmers, the Australian owner of Homebase, got huge
termination payoffs as they left the business shortly before it
revealed massive costs from its failed attempt to overhaul the
British DIY business.

According to The Telegraph, former chief executive Richard Goyder
and ex-chief financial officer Terry Bowen got almost
AUD1 million (GBP760,000) each when they left Wesfarmers in
November.

Three months later the company, parent to Homebase-owner
Bunnings, revealed it was taking GBP584 million of write-downs on
the business -- more than the GBP340 million it paid for the
chain in 2016 when it bought it from Home Retail Group, The
Telegraph relates.


MANSARD MORTGAGES 2006-1: Fitch Hikes Cl. B2a Debt Rating to B+
---------------------------------------------------------------
Fitch Ratings has upgraded 11 tranches of Mansard Mortgages 2006-
1 PLC (MAN061), Mansard Mortgages 2007-1 PLC (MAN071) and Mansard
Mortgages 2007-2 PLC (MAN072) and affirmed the rest, as follows:

MAN061

Class A2a (ISIN XS0272297358) affirmed at 'AAAsf'; Outlook Stable

Class M1a (ISIN XS0272298752) affirmed at 'AAAsf'; Outlook Stable

Class M2a (ISIN XS0272299057) upgraded to 'AA-sf' from 'Asf';
Outlook Stable

Class B1a (ISIN XS0272304311) upgraded to 'BBB+' from 'BBBsf';
Outlook Stable

Class B2a (ISIN XS0272303693) upgraded to 'B+sf' from 'Bsf';
Outlook Stable

MAN071

Class A2a (ISIN XS0293438965) affirmed at 'AAAsf'; Outlook Stable

Class M1a (ISIN XS0293458054) upgraded to 'AA+' from 'AA-sf';
Outlook Stable

Class M2a (ISIN XS0293460381) upgraded to 'A-sf' from 'BBB+sf';
Outlook Stable

Class B1a (ISIN XS0293442215) upgraded to 'BB+sf' from 'BBsf';
Outlook Stable

Class B2a (ISIN XS0293446711) affirmed at 'Bsf'; Outlook Stable

MAN072

Class A1a (ISIN XS0333305299) upgraded to 'AAAsf' from 'AAsf';
Outlook Stable

Class A2a (ISIN XS0333306933) upgraded to 'AAAsf' from 'AAsf';
Outlook Stable

Class M1a (ISIN XS0333308475) upgraded to 'AA-sf' from 'Asf';
Outlook Stable

Class M2a (ISIN XS0333311693) upgraded to 'BBBsf' from 'BBB-sf';
Outlook Stable

Class B1a (ISIN XS0333313988) upgraded to 'BBsf' from 'B+sf';
Outlook Stable

Class B2a (ISIN XS0333340361) affirmed at 'CCCsf'; Recovery
Estimate increased to 85% from 80%

The transactions are backed by residential mortgages originated
by Rooftop Mortgages, a non-conforming mortgage lender.

KEY RATING DRIVERS

Growing Credit Enhancement (CE)

With the support of both Fitch's surveillance model and cash flow
model, its analysis showed the CE available to protect against
expected losses was sufficient to withstand the relevant rating
stresses, leading to the upgrades and affirmations. The cash
reserves are non-amortising across all three transactions due to
irreversible trigger breaches; as such CE for all notes continues
to increase as the notes amortise.

Improved Arrears Profiles

Performance of the transactions has improved in terms of the
proportion of loans in arrears. As of July 2018 three month-plus
arrears stood at 6.23% for MAN061, 4.98% for MAN071 and 1.55% for
MAN072, versus 7.94%, 5.61% and 1.85% respectively a year ago.
Repossessions have also only increased at a slow rate over the
last 12 months.

Interest Only (IO) Concentration

The transactions have a material concentration of IO loans
maturing within a three-year period during the lifetime of the
transactions. For MAN061, 55.3% mature between 2029 and 2031; for
MAN071, 55.82% mature between 2030 and 2032 and for MAN072,
around 46.05% mature between 2030 and 2032. As per its criteria,
Fitch tested additional foreclosure frequency assumptions for the
IO loans with maturities concentrated in a three-year period. The
results of the additional foreclosure frequency assumption
testing have not constrained the notes' ratings.

RATING SENSITIVITIES
Given the significant proportion of IO loans with a concentration
in a three-year period in each transaction, increased
foreclosures may result, if borrowers are unable to refinance
these loans at maturity, leading to losses.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.

DATA ADEQUACY

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. There were no findings that affected
the rating analysis. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.

Fitch did not undertake a review of the information provided
about the underlying asset pools ahead of the transactions'
initial closing. The subsequent performance of the transactions
over the years is consistent with the agency's expectations given
the operating environment and Fitch is therefore satisfied that
the asset pool information relied upon for its initial rating
analysis was adequately reliable.

Overall and together with the assumptions referred, Fitch's
assessment of the information relied upon for the agency's rating
analysis according to its applicable rating methodologies
indicates that it is adequately reliable.

SOURCES OF INFORMATION

The information here was used in the analysis.

Mansard Mortgages 2006-1:

  - Transaction reporting dated July 9, 2018 and provided by
Wells Fargo.
  - Loan-by-loan data dated July 9, 2018 were used to run the
relevant model and the relevant data sources were Link Mortgage
Services.

Mansard Mortgages 2007-1:

The data used for the development of the rating, included the
following information from the following sources:

  - Transaction reporting dated July 9, 2018 and provided by
Wells Fargo.
  - Loan-by-loan data dated July 9, 2018 were used to run the
relevant model and the relevant data sources were Link Mortgage
Services.

Mansard Mortgages 2007-2:

The data used for the development of the rating, included the
following information from the following sources:
  - Transaction reporting dated June 7, 2018 and provided by
Citi.

  - Loan-by-loan data dated June 7, 2018 were used to run the
relevant model and the relevant data sources were Link Mortgage
Services.


TOGETHER FINANCIAL: S&P Affirms BB- Long-Term ICR, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long-term issuer credit
rating on Together Financial Services Ltd. The outlook is stable.

S&P said, "At the same time, we affirmed the 'B+' long-term
issuer credit rating on Bracken MidCo1 PLC. The outlook is
stable. We also assigned a 'B+' issue rating to the proposed
GBP350 million senior PIK toggle notes issued by Bracken Midco1
PLC. We also affirmed the existing 'BB-' issue ratings on senior
secured notes issued by Jerrold Finco PLC, and guaranteed by
Together Financial Services Ltd.

"Our rating affirmations reflect our view that the proposed
refinancing transaction does not materially affect the group's
consolidated capitalization, and does not indicate any change in
its risk appetite, niche business profile, or its funding
position. Pro forma capitalization is unaffected on day one
because we already analyze the group on a consolidated basis,
taking into account the intermediate non-operating holding
companies that issue the existing and proposed debt."

Together's current strategic focus is consistent with the actions
it has implemented in recent years. Its primary focus is on
furthering its position in the non-standard mortgage market,
demonstrated by its fast pace of growth in new advances. S&P
said, "We do not think its strategy will materially change
Together's current profile; rather, it will continue to make
steady progress in expanding its market position and franchise.
Together has also made progress in diversifying its funding base
and building out its management and governance framework to
support its growth plans. If executed well, we consider its
strategy should continue to support its overall creditworthiness
at the current rating level."

Together's low loan-to-value (LTV), high-margin mortgage lending
remains the engine of its profitability, making up the vast
majority of Together's GBP121 million statutory pre-tax profit in
the 12 months to June 30, 2018. Pressure on its net interest
margin from changes in its lending mix and mortgage market
competition was partly offset by liability margin improvements.
No material one-off items decreased profitability, but it was
constrained by an increase in operating expenses reflecting its
recent investments. Asset quality metrics have continued to
improve, with reported total arrears (including forborne loans)
reducing to 8% of the total loan book, down from as high as 21%
in 2014. Part of this is due to the reduction of its legacy
development loan portfolio, but some reflects Together's fast
pace of loan growth, which somewhat distorts asset quality
metrics. In the past 12 months Together's net loan book has grown
32% to close to GBP3 billion.

S&P said, "We expect this brisk pace of credit growth to continue
over our 12 month outlook horizon. Although the refinancing
transaction in isolation is neutral for the group's
capitalization, we expect it to trend down as the pace of loan
growth is maintained. We calculate our June 30, 2018, risk-
adjusted capital (RAC) ratio at 10.7%, down from 11.4% a year
earlier.

"Taking into account credit growth, profitability, and the
effects from transitioning to IFRS 9 on July 1, 2018, we forecast
the RAC ratio to trend in the 9.25%-9.75% range over the
following 12-18 months. This is the primary reason for us
lowering our capital and earnings assessment. However, we
recognize that our RAC ratio does not capture our expectation
that Together will proportionately grow its lower risk first-
charge retail mortgages, which we believe to be better quality
than the average of its existing portfolio. Moreover, we take
into account that Together's historical loss experience has been
supportive of its profitability, reflecting the low weighted
average indexed LTV of 55%, which has been stable for many years.
We have adjusted our risk position assessment to reflect this.

"The 'B+' long-term issue credit rating on MidCo is one notch
lower than the rating on Together, reflecting structural
subordination. Specifically, we believe that the senior secured
notes guaranteed by Together have preferential rights to cash
flows generated by the operating entities. We also take into
account that Together is not subject to regulatory capital
requirements. Consistent with our criteria, we equalize the issue
rating on the proposed GBP350 million senior PIK toggle notes
with the credit rating on Midco, the issuer.

"The stable outlooks on Together and MidCo reflect our
expectation that the group will maintain its solid earnings
performance, consistent strategic focus, and acceptable asset
quality over our 12-month rating horizon. We also consider that
the group has strengthened its corporate governance and
operational infrastructure as it has expanded, and we expect that
it will continue to develop these areas. Under our base-case
scenario, we expect the group's consolidated capitalization and
leverage to stabilize over the next 18 months, and we view
management as committed to adequate capitalization.

"We could lower the ratings if asset quality deteriorated, or if
our RAC ratio continued to briskly decline. This could happen if
Together's recent phase of investments did not lead to improving
profitability and positive internal capital generation. We could
also lower the ratings if loan growth is greater than we expect,
or we believe that such growth could deteriorate its asset
quality.

"Over the next 12 months we consider upside to the ratings as
limited due to its brisk loan growth. However, we could raise the
ratings if the group's consolidated capitalization increased
substantially beyond our current base-case expectations. As a
non-bank lender, Together's funding and liquidity position is
relatively sound. However, further diversity in its funding mix
could also support a higher rating, especially given its reliance
on regularly refreshing its sources of funding to maintain its
current growth rate."


VTB CAPITAL: S&P Lowers Ratings to 'BB+/B', Outlook Stable
----------------------------------------------------------
S&P Global Ratings lowered its long- and short-term ratings on
U.K.-based VTB Capital PLC to 'BB+/B' from 'BBB-/A-3'. The
outlook is stable.

S&P said, "In our view, VTB Bank JSC's restructuring of its
European activities -- as a response to Brexit and geopolitical
risks that heightened in 2018 -- reduces the importance of VTBC
to the group. We understand VTBC will be scaled down from the
group's key investment platform to undertake only selected
trading activities: market intermediation and some derivative
business. We also understand that other businesses are being
moved to subsidiaries in continental Europe, VTB Europe S.E. in
particular.

"We note that the transfer of operations might be accompanied by
the transfer of capital."

These steps follow a period of marked decline in VTBC's business
in recent years. Whereas VTB had sought growth for this
subsidiary until 2014, the adverse economic and political
environment since then has weakened market activity and led VTB
to reduce its ambitions for VTBC's lines of business.

S&P said, "As a result, we believe the importance of the U.K.
subsidiary for the group has reduced. Nevertheless, we continue
to consider VTBC to be a highly strategic subsidiary of VTB,
since market intermediation in Russian securities remains an
important and essential part of group's investment banking
activities. We also expect the group to keep its presence in the
U.K. because London is likely to remain a major global financial
center. We continue to expect that VTB would have the resources
and willingness to support VTBC if needed.

"The stable outlook reflects our view that VTBC will remain an
integral part of the group and that its credit quality will not
deteriorate materially.

"We may lower the ratings if we see that the group's strategy or
financial policy has a negative effect on VTBC. This could come
from a large withdrawal of capital from VTBC or a further
decrease of VTBC's role in VTB's strategy outside Russia.

"We see a positive rating action as a remote prospect at this
time, mainly because of our stable outlook on the parent VTB.
Moreover, we are unlikely to revise our view of VTBC's importance
upward unless there is a marked increase in business activity
that improved VTBC's profitability and contribution to the
group."




                            *********

Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.


                            *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.

Copyright 2018.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000.


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